Chinese Industries and Economic Reforms - Coursework Example

Chinese industries and economic reforms Name Institution name Introduction China economy has grown right after economic reforms and liberalization of trade. Initially china operates under policies that made the economy poor and even to stagnate. China’s economy has been constantly transformed from old planned economy to the one which is being influenced by market. After these reforms there was noticeable growth in many areas of the economy. China began its economic reforms towards a market oriented economy in 1978 (Chow, 2004, p 127). The management of industries and various sectors of the economy were different before the reforms and after the reforms were implemented. This paper therefore examines how the Chinese industries were managed before and after the commencement of economic reforms with respect to major human resource activities such as planning, training and development. In attempt to explain the management of different kinds of economy transformation, it is important to understand the drives of the market economy. China could not have avoided change since change is inevitable, economic reforms were contributed by a number of factors such as unpopularity of the cultural revolution that occurred in 1966-1976, most importantly through experience most economic planners argued that having a planned economy is difficult to manage and is rather economically insufficient, the success of market oriented economic reforms from neighbouring countries which revealed that it has more benefits which are worth aiming at. This created the urge to have a market oriented reform from the people who were ready to support it (Chow, 2004, p 128). Before reforms in 1978, china has a centralised system, meaning that the country’s economic output was controlled by the state (Morrison, 2014, p. 2). Montias, (1959, p. 963) argues that in soviet planning material balance is the core of everything. This kind of planning is bureaucratic since decision on all its elements including output orders, imports etc. are made and implemented by the administrative personnel. The bureaucracy was at two levels, the central and the enterprise level and there are two categories under which commodities are placed central and local planned communities (Manove, 1971, p. 393). All parts of the economy was grouped into a large pyramid like structure (Mc Nally, 2002, p. 3) In agricultural industry, centralised system also known as collective farming was done. This described the commune system that was introduced by Mao in 1958. Under this collective form of farming, farmers were organised into groups or teams that consisted of approximately 40 people. Development was tied to how the farmers performed as a group and it was hard for a farmer to earn extra reward or profit even with hard work simply because the team consisted of the many members who would share the reward as a result of additional efforts by a member of the group. As time goes by management of the farms changed and growth was realised. Farmers noticed that by working separately and independently they could achieve a lot more. Commune system of farming was therefore changed and land ceased to be communal but individual. Every Individual household did farming independently and each earns additional rewards as a result of extra work (Chow, 2004, p. 129). This described the reform in agriculture where land are now managed independently and growth is realised a system called household system where resources are managed by one person rather than in a group. Management policies as well as labour practices changed. The first phase that occurred during economic rehabilitation and socialist was characterised by on person management, the second phase stressed the idea of commanding role of party, as well as the political ideology and workers leading role. Phase three in the time of economic adjustment implemented the policies of the first phase (Zhu, 2005, p. 25). The implication of the Commune system is that individual farmers did not have ease with which they could make decision on matters pertaining the land something which the fames under the household system achieved. Chinese government in early 1950s adopted the strategy of catch and take in order to achieve industrialization. Here the management as well production by the state owned enterprises were controlled by the administration. State owned enterprises before reforms were did not have autonomy in either production marketing of their products, employment of worker, utilization of profits amassed, inputs or even investment. The kind of planning that was in use way centralised planning (Hu, 2005, p. 4). Before reforms all enterprises were owned by the government. Leadership was designated by the government official. All the revenue belonged to the government. Zhu, 2005, p. (25) argues that management of state owned enterprises was like a bird locked in a cage. After the reforms the state enterprises enjoyed monopoly and the centralised system of planning was removed. Separation of government and enterprise functions was done in order to ensure that decisions such as production and investment by enterprises were made purely on economic grounds other than on political ground. These enterprises were able to control production marketing as well as do investment decisions. Managerial concentration in terms of autonomy that made the Chinese to pursue growth was the first phase in SOEs reformation that occurred in 1978 up to 1984. Government weakened its link from the enterprises. This provided managers with a lot of control in terms of profit as well as production. In the second phase managers given even more control because after signing the contract responsibility they became legally responsible for the company. Manager were able then to do planning and to visualise their profits and this made them start concentrating on short term profit strategies rather than long because only the right to operate the SEO was granted to them (Geng, Yang and Janus, n.d., p.157) In the year 1990 the local government set up measures which enabled the new enterprise to join the market, these were the non-state enterprises and thereby creating competition the system of finance also changed and all finances belonged to the enterprises but that is after paying taxes to the government (Chow, 2004, p. 130). Many issues were raised about these kinds of enterprises, the major was competence of the staff management who were not qualified and did not have the required knowledge. More so the bureaucracy and connection dominated the selection of management team to a very high extend (Chow, 2004, p 130).That is however not the case nowadays since most managers are ambitious and are knowledgeable enough. Hu, (2005, p. 5) who believes that the epicentre of every enterprise is human and motivation is over essential, having a strong leader is important in establishing and sustaining a company for long. Hu continue to argue that entrepreneurs nowadays are persistent have integrity and are led by clear perspective. Chinese entrepreneurs are highly courageous resolute and are appreciating their work. To the entrepreneurship is a life responsibility and pleasure at the same time. They are very eager to get new knowledge even if it is through experience which they later on apply in management innovatively incorporating it with technological innovation. Geng, Yang and Janus, (n.d., p.157) argue that in the third phase of SEO reforms as from 1993 to date saw that the SOEs are transformed into Modern Corporation. Managers are able to use the policy of grab more and let go of small. Industries were privatised and being even listed on stock exchange markets. Banking and finance industry right before reforms were mono-banks which function to accepts deposits from the public, to issue currency and issue loan to the state owned enterprises. Their management was characterized by red tape and all decisions were made by the planning authority and have no authority to decide over loans. Commercial banks were introduced after the reforms. There are three things that affect the functionality of most commercial bank, which is the level of expertise of the staff working in the bank, the organization and incentive system in the banks, and external influences. Large commercial banks are normally owned and controlled by state. They therefore face the challenges of state enterprises which include staff and management problems and bureaucracy among staff and management. Bureaucracy has led to poor services to customers and corruption and misappropriation of public funds (Chow, 2004 p, 146). Currently however with increase knowledge and experience bureaucracy have been eliminated and management are more competent than ever. Conclusion China economic reform to a market from planned economy was multidimensional meaning that it various economic institutions were involved. The change from one known way of doing thing to another resulted in different kind of managerial functions. Right the planned system china red tape has reduced after the reform. This has made management easier and efficient. With effective management come greater benefits which include better utilization of resources, better staff satisfaction, and realization of greater profits. Without proper managerial function such as planning training development in all dimensions of development will never be realized. Chinas economy prior to reforms can never be compared to china economy after the reforms; this is much attributed by high level of management functions References Chow, G. (2004). Economic reform and growth in China. Annals of Economics And Finance., 5, pp.93--118. Geng, X., Yang, X. and Janus, A. (n.d.). State-owned enterprises in China Reform dynamics and impacts. 1st ed. [ebook] Available at: http://globalcenters.columbia.edu/eastasia/files/beijing/content/pdf/2009-SOEs_in_China-Reform_dynamics_and_impacts_Chinas_New_Place_in_a_World_in_Crisis_2009_0.pdf [Accessed 13 May. 2014]. Hu, V. (2005). The Chinese Economic Reform and Chinese Entrepreneurship. 1st ed. [ebook] Available at: http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan023535.pdf [Accessed 13 May. 2014]. Manove, M. (1971). A model of Soviet-type economic planning. 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